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Grace: The Law on Escrow Fees

This letter was written in its entirety by candidate for supervisor, and former Yorktown attorney, Michael Grace. To read prior letters to the editor between Supervisor Siegel and Grace regarding escrow fees, click here .

Open-ended unlimited town held escrow account funds used to facilitate the billing of applicants for the fees charged to the town by the Town’s own outside consultants, experts and attorneys are not legal.  The United States Federal Court for the Southern District of New York in July 2010 in the case of Metro PCS v. City of Mt. Vernon set forth an opinion written by the learned Judge Robinson striking down a similar escrow fee law enacted by the City of Mount Vernon. The Court held the law invalid on the basis that there was “no codified limit to the consulting fees that can be assessed over the course of the application process” and therewith ordered the return of the consulting fees paid by the Plaintiff in the case.  The  Federal Court cited a 1976 New York  Court of Appeals case (the highest Court in the State of  New York) Jewish Reconstructionist v. Roslyn Harbor that held  such fees to be an unauthorized tax, which is an unconstitutional exactment. Supervisor Siegel, with all due respect, the fees are illegal.

Perhaps, for the purposes of full disclosure, you should advise your readers that the “experienced land use attorneys” upon whose advice you relied are in the same firm that is the beneficiary of the unlimited fees applicants pay.  It is to their benefit to advise you that it’s legal – they line their pockets with your constituents’ money.

Furthermore, although the attorney collecting the fees may have a retainer with the Town, the town is not paying the fees under that agreement, the applicant is. The town or perhaps more accurately the town’s retained attorney racks up the bill based upon its retainer agreement with the town, but it is the applicant who pays the bill; the same applicant whose approval is held hostage by the attorney’s opinion on the issues, right or wrong.

The escrow fee law is not only illegal, it is morally repugnant. It only goes to reinforce this town’s reputation of contempt toward the business community.

The truth is you do not have to be lawyer to understand the inherent unfairness in charging an applicant legal and expert fees that the town has incurred with the applicant having no say in how much time is spent in review of an application, the hourly rate charged or the fairness of the issues reviewed.

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